Consortium signs deal to explore Tarim Basin
A CONSORTIUM of five Western oil companies yesterday signed an agreement with China allowing them to look for oil in the Tarim Basin in Xinjiang, which the Chinese opened up to foreign developers last year.
The agreement - signed by China National Petroleum Corp and a consortium including Agip, Elf Hydrocarbures Chine, Japan Petroleum Exploration, Japan Energy and Texaco China - covers a block of 9,814 square kilometres in the southeastern part of the remote basin.
Last February, China invited bids for five blocks covering a total 72,730 sq km in the southeastern part of the basin. This is the second exploration deal in the area, following one late last year with Exxon.
''We happen to think that this particular area is a world-class exploration opportunity because the potential for very large quantities of oil is high,'' said William Doyle, director of Texaco China and vice-president of Texaco Inc, who was in Beijing for the signing ceremony.
Mr Doyle noted that many experts had ranked the Tarim Basin - which covers 560,000 sq km - as an opportunity comparable with the North Sea.
He said the region had greater potential than Chinese offshore sites, which had generally proven disappointing.
Chinese estimates put the Tarim's reserves at 10 billion tonnes and upwards. In 1992, the region produced 900,000 tonnes of oil, a small share of China's total production of 140 million tonnes. According to one Chinese expert, the region could produce 2.5 million tonnes of oil this year.
Mr Doyle said seismic surveys in the Tarim would begin this year, with drilling to follow and development by the end of the decade.
Chinese officials have indicated that, in addition to the five blocks already on offer, they will be opening up further sections of the Tarim.
Currently the small oil output in the Tarim has to be shipped to eastern China by truck and rail. But the Chinese are talking about building a pipeline over the next few years to keep pace with development of the oil fields.